Poundland's (PLND) shares lost more than a fifth of their value on the back of these half-year numbers. The market had reacted well when the group received the regulatory green light for its £55m acquisition of rival group 99p Stores. But it seems the costs of that deal - coupled with weak trading across the existing business - will lead to material losses in the second half. That prompted a series of forecast downgrades from City analysts, including broker Investec. Analysts there cut pre-tax profit forecasts for the year ending March 2016 by a fifth to £36.1m, equating to EPS of 11p, compared with £43.7m and 13.6p for FY2015.
Poundland completed the 99p deal on 28 September 2015 - the day after the close of its first-half trading period. Therefore, these numbers do not include any of the sales uplift achieved from the first converted stores, which chief executive Jim McCarthy described as "very encouraging".
But first-half trading across the existing Poundland estate was less than stellar as the group fought against tough comparative figures owing to the timing of Easter and last year's loom band craze. Like-for-like sales fell 2.8 per cent, while costs associated with the acquisition and the Spanish pilot led to a 26 per cent crash in underlying pre-tax profit to £9.3m.
| POUNDLAND (PLND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 231p | MARKET VALUE: | £620m | |
| TOUCH: | 231-232p | 12-MONTH HIGH: | 421p | LOW: 216p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 100p* | NET CASH: | £66m | |
| Half-year to 27 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 528 | 9.3 | 2.9 | 1.5 |
| 2015 | 561 | 5.3 | 1.5 | 1.7 |
| % change | +6 | -43 | -47 | +10 |
Ex-div: 14 Jan Payment: 29 Jan *Includes intangible assets of £183m, or 68p a share | ||||
